High street baker Greggs on course to see big jump in profits as new strategy boosts sales

High street bakery chain Greggs is on course to report a significant rise in half year operating profits this year after sales rallied on the back of recent turnaround efforts.

Greggs said it expected to report profits of between £16million and £17million in the six months to the end of June, compared with £11.5million a year ago when it unveils interim results later this month.

The bakery chain, which has 1,661 shops in the UK, said like-for-like revenues grew by 3.2 per cent in the period.

Sales boost: Gregs the baker has seen a sales uplift of 3.2 per cent in the last six months

The solid performance follows a move by chief executive Roger Whiteside to increase the focus of the business on the food-on-the-go market, which accounts for 75 per cent of sales, rather than its traditional take-home business.

Greggs has responded by completing 131 shop refurbishments in the first half of the year, in line with its plan to refit around 200 shops by the year’s end.

It also opened 26 new shops and closed 36 in a drive to target more sites in locations such as retail and industrial parks and motorway service stations.

Greggs' results will benefit from comparisons with a period of soft trading last year but it that added growth is also being driven by improvements to its products, availability, service and value.

The company said: ‘Overall, we expect to deliver an improved financial result for the year and further progress against our strategic plan.’

Greggs has introduced a new pizza product that has become one of its fastest selling lines, as well as a range of 'heat to eat' sandwiches. In savouries it has improved the fillings in its best-selling lines such as Steak Bakes.

Costs also showed signs of easing in the first half of the year but Greggs has warned that the costs of investing in its turnaround programme is likely to constrain profit growth over the next two years.

Shares were up over 3 per cent, or 17.3p to 553.3p in lunchtime trading..

Shore Capital analyst Darren Shirley said: ‘Comparatives for the period were weak and the weather conditions have been almost perfect for Greggs, so we are not getting carried away.

However, stores have clearly benefited from improved availability, longer trading hours as well as product upgrades.

‘We believe Roger Whiteside merits much credit for progressively returning Greggs' stores to like-for-like growth over the course of his 15 months' tenure.’